Tech sell-off after Democratic midterm win erases trillions; Anthropic IPO at risk

Tech sell-off on Wall Street

The Nasdaq 100 fell more than six percent on Thursday, 5 November, erasing every gain it had made since April. Nvidia dropped more than nine percent. Estimates of the value wiped out differ mainly because they cover different scopes: one figure puts the loss at 2.3 trillion dollars for the tech index, while another puts the one-day loss across US stocks at almost 3 trillion dollars. The drop was the sharpest one-day fall in the Nasdaq since the Corona crash. Investors had already marked down Amazon, Alphabet and Meta after their quarterly results, and leveraged bets on AI and chip shares were being unwound.

Midterms and AI rules

Democrats won the US midterm elections on Tuesday, 3 November. Investors now expect stricter rules for technology and artificial intelligence, and a slowdown in data center construction, after initiatives restricting data centers succeeded in several US states. Yassamin Ansari, a Democratic member of the US House of Representatives, posted on X that her party's top priority should be a ban on artificial superintelligence, arguing that the rapid expansion of AI must be halted at least temporarily. Matthias Geissbühler, chief investment officer at Raiffeisen Schweiz, said that since the end of June semiconductor stocks, South Korea's tech-driven market and many AI shares had lost between 30 and 60 percent. He described the AI bubble as at least partly burst.

“We are seeing a correction in the markets.”

Europe and Asia follow

Markets in Europe and Asia followed Wall Street. On Friday, 6 November, the Dax fell to 25,940 points, down 1.46 percent, a quarter hour after the Xetra open, having briefly hit a record high of 26,692 points on Thursday before the US sell-off pushed it into the red. The MDax slid 1.07 percent to 30,560 points and the EuroStoxx 50 lost 1.2 percent. In Asia the Nikkei 225 and the Kospi fell sharply, while the CSI 300 lost 1.4 percent and the Hang Seng 1.3 percent. Jochen Stanzl of Consorsbank said caution was rising because the Dax had only just priced in an ideal environment.

“Fear of an AI build-out halt by the Democrats is clouding sentiment.”

Dax (quarter hour after Xetra open)-1.46%

MDax-1.07%

EuroStoxx 50-1.2%

CSI 300-1.4%

Hang Seng-1.3%

Dax (quarter hour after Xetra open)

-1.46 %

MDax

-1.07 %

EuroStoxx 50

-1.2 %

CSI 300

-1.4 %

Hang Seng

-1.3 %

Data from the article text

Anthropic listing in doubt

Anthropic, the company behind the Claude AI model, is expected to list in November, with a window reported between 16 and 20 November. Four people familiar with the process told Reuters that a marketing tour of investors planned for the coming week is in doubt, and that investors want a valuation below the 1.5 trillion dollars that had been under discussion. Anthropic may have to grant a bigger discount to secure commitments, citing ongoing quarterly losses and heavy financial obligations for its AI expansion. Anthropic declined to comment. Investors are also waiting for October revenue figures that the company left open in its updated prospectus. The offering is expected to raise about 100 billion dollars, and no official valuation or price range has been published, yet several brokers, including Trade Republic, already advertise that German investors can subscribe. A prediction market, Kalshi, put the chance of a November listing at close to 90 percent before the midterms and below 60 percent after them.

Outlook

Geissbühler expects a short-term rebound because the market is oversold, but he sees no classic signs of capitulation yet and expects the correction to run on in the medium term. Swiss shares are less exposed because technology plays a minor role there, and the SMI is benefiting as money rotates into healthcare and consumer staples.